Tag: strategy

Too many companies rely on short-term fixes to address long-term, complex problems. The result is a series of failed attempts at resolving fundamental, underlying business challenges.

I was talking with some former colleagues the other day about a manager we all knew who had recently been fired. Her time in the role was short and now it was over. None of us were really surprised. She was brought in from outside the company to stir things up. And she did. Upper management wanted quick results so she focused on short-term fixes. She was a bull in a China shop. She brought in her own people, boosted the financials by deep cost-cutting, fired long-term employees, and instituted a top-down autocratic management style. She was laser-focused on short-term results and refused to listen to the concerns of employees and other managers. Anyone who challenged or questioned her authority was let go.

As you can imagine, the business results improved but morale dropped sharply. The good employees eventually all left the company and most of the institutional knowledge left as well. The only people who remained were those that were loyal to her and those that were quietly waiting for her to leave. Fear and anxiety became the norm. As a result, company performance ultimately fell off and all of the short-term gains she had made vanished. The company began to lose money and market share. Eventually, upper management had no choice but to fire her. The damage was done.

“You can’t build a long term future on short term thinking.” Billy Cox

Time and time again, I see companies bringing in short-term managers to fix long-term systemic problems. Often these companies have fundamental, structural flaws that need to be addressed. They have complex problems that need long-term, systemic thinking. Consider the examples of Radio Shack, Sears, K-Mart, and General Electric. Each of these companies has deep-rooted issues that have taken decades to develop. For years, leaders of these companies have focused on a series of attempts at short-term fixes. In the end, this short-term mindset has done little to address the underlying, long-term problems.

“For every complex problem, there is an answer that is clear, simple, and wrong.” H. L. Mencken

Consider a similar company, Levi Strauss & Co. The iconic denim brand reached its peak in 1996 with $7.1 billion in sales. After that, sales declined rapidly. Competition from other brands and a lack of creative and new ideas pushed it from the center of American culture. Young customers were fleeing to newer and trendier “designer jeans.” Levi Strauss was going the way of Blockbuster. It was just a matter of time.

In 2011, a 28-year Proctor & Gamble executive named Chip Bergh took over as CEO. He inherited a company steeped in debt, struggling to reinvent itself in the highly competitive U.S. denim market. Instead of a series of short-term actions, however, he developed a long-term plan to put the iconic brand “back in the center of culture.” Instead of cutting costs, he invested in innovation and a new research-and-development center called the Eureka Innovation Lab. He also went back to basics. He focused the company’s efforts on making the best jeans, especially for women. He purposely stopped chasing other clothing categories that were a distraction. He also became less reliant on retail chains like J.C. Penny’s and Macy’s. Instead, he expanded the network of Levi-branded stores.

What’s even more surprising, is that Levi’s board gave him the time to execute his plan. And, it worked. After six years of implementing his turnaround strategy, Bergh finally saw the results. Levi sales grew by 7.7% in 2017 and by 13.9% in 2018. Last week, Bergh announced plans to take Levi’s public after a 34-year absence from the stock market. Bergh now feels that Levi Strauss has the potential to be a $10 billion company. He stated that “Levi’s lost a generation of consumers in the early 2000s, but today our customers are younger than ever—and we’re gaining momentum as we bring them back.” Long-term thinking brought Levi’s from the brink of collapse back into the center of culture.

“Long-term consistency trumps short-term intensity.” Bruce Lee.

Stories like this give me optimism. Senior managers of other struggling companies should be able to see the extraordinary turnaround of Levi Strauss and realize the time and effort that was required to make this happen. This is clear evidence of the power of long-term thinking and the patience required to allow these turnaround plans to come to fruition. Maybe someday we will see an end to short-term managers and the illusion of quick fixes.

If you are looking for a good book on long-term thinking, you should read Go Long: Why Long-Term Thinking Is Your Best Short-Term Strategy. This book reveals how some of the world’s most prominent business leaders resisted short-term pressures to successfully manage their organizations for the long term, and in turn, aim to create more jobs, more satisfied customers, and more shareholder wealth.

Too many companies rely on short-term fixes to address long-term, complex problems. The result is a series of failed attempts at resolving fundamental, underlying business challenges.

I was talking with some former colleagues the other day about a manager we all knew who had recently been fired. Her time in the role was short and now it was over. None of us were really surprised. She was brought in from outside the company to stir things up. And she did. Upper management wanted quick results so she focused on short-term fixes. She was a bull in a China shop. She brought in her own people, boosted the financials by deep cost-cutting, fired long-term employees, and instituted a top-down autocratic management style. She was laser-focused on short-term results and refused to listen to the concerns of employees and other managers. Anyone who challenged or questioned her authority was let go.

As you can imagine, the business results improved but morale dropped sharply. The good employees eventually all left the company and most of the institutional knowledge left as well. The only people who remained were those that were loyal to her and those that were quietly waiting for her to leave. Fear and anxiety became the norm. As a result, company performance ultimately fell off and all of the short-term gains she had made vanished. The company began to lose money and market share. Eventually, upper management had no choice but to fire her. The damage was done.

“You can’t build a long term future on short term thinking.” Billy Cox

Time and time again, I see companies bringing in short-term managers to fix long-term systemic problems. Often these companies have fundamental, structural flaws that need to be addressed. They have complex problems that need long-term, systemic thinking. Consider the examples of Radio Shack, Sears, K-Mart, and General Electric. Each of these companies has deep-rooted issues that have taken decades to develop. For years, leaders of these companies have focused on a series of attempts at short-term fixes. In the end, this short-term mindset has done little to address the underlying, long-term problems.

“For every complex problem, there is an answer that is clear, simple, and wrong.” H. L. Mencken

Consider a similar company, Levi Strauss & Co. The iconic denim brand reached its peak in 1996 with $7.1 billion in sales. After that, sales declined rapidly. Competition from other brands and a lack of creative and new ideas pushed it from the center of American culture. Young customers were fleeing to newer and trendier “designer jeans.” Levi Strauss was going the way of Blockbuster. It was just a matter of time.

In 2011, a 28-year Proctor & Gamble executive named Chip Bergh took over as CEO. He inherited a company steeped in debt, struggling to reinvent itself in the highly competitive U.S. denim market. Instead of a series of short-term actions, however, he developed a long-term plan to put the iconic brand “back in the center of culture.” Instead of cutting costs, he invested in innovation and a new research-and-development center called the Eureka Innovation Lab. He also went back to basics. He focused the company’s efforts on making the best jeans, especially for women. He purposely stopped chasing other clothing categories that were a distraction. He also became less reliant on retail chains like J.C. Penny’s and Macy’s. Instead, he expanded the network of Levi-branded stores.

What’s even more surprising, is that Levi’s board gave him the time to execute his plan. And, it worked. After six years of implementing his turnaround strategy, Bergh finally saw the results. Levi sales grew by 7.7% in 2017 and by 13.9% in 2018. Last week, Bergh announced plans to take Levi’s public after a 34-year absence from the stock market. Bergh now feels that Levi Strauss has the potential to be a $10 billion company. He stated that “Levi’s lost a generation of consumers in the early 2000s, but today our customers are younger than ever—and we’re gaining momentum as we bring them back.” Long-term thinking brought Levi’s from the brink of collapse back into the center of culture.

“Long-term consistency trumps short-term intensity.” Bruce Lee.

Stories like this give me optimism. Senior managers of other struggling companies should be able to see the extraordinary turnaround of Levi Strauss and realize the time and effort that was required to make this happen. This is clear evidence of the power of long-term thinking and the patience required to allow these turnaround plans to come to fruition. Maybe someday we will see an end to short-term managers and the illusion of quick fixes.

If you are looking for a good book on long-term thinking, you should read Go Long: Why Long-Term Thinking Is Your Best Short-Term Strategy. This book reveals how some of the world’s most prominent business leaders resisted short-term pressures to successfully manage their organizations for the long term, and in turn, aim to create more jobs, more satisfied customers, and more shareholder wealth.

I recently had an experience staying in a $68 a night hotel that was remarkable. I was helping my son move and I just need a place to crash for the night. The cheapest hotel in the area was a brand I had never heard of but, it had decent reviews, so I booked it. I didn’t expect much but what I experienced was amazing. The staff was friendly. The lobby was open and airy. The room was clean and spacious. The $68 rate even included a hot breakfast. I was blown away by the value.

This experience made me think about how brands affect our buying decisions. When I travel on business, I mostly stay in big brand hotels. I try to find the best rates but I also want a hotel that is going to be clean and safe. I don’t want to risk having a bad night in a terrible hotel. There is comfort in choosing a big brand but this method isn’t foolproof. Like most business travelers, I can tell you countless stories of bad hotels with rude staffs, dirty rooms, and terrible conditions. It turns out that the name on the outside of the hotel doesn’t always guarantee the quality inside.

So, why do we tend to choose known brands over lesser known brands in our buying decisions? I think there are three main reasons:

Comfort and speed. We’re busy. When making purchasing decisions, we don’t want to spend a lot of time looking at all the various options and information available to us. We recall past purchases and recent advertisements to identify the best choice. Big brands are comfortable because they are known to us. We have heard of them or have had past experiences with them. For speed, we choose the known over the unknown.

Identification. Brands affect our identity. Often times, we choose brands that we want to be associated with. Driving a Ford pickup, wearing Levi jeans, or owning a Gucci purse all say something about us. We will also choose brands that are accepted in our peer groups. A serious weightlifter, for example, wouldn’t show up at the gym in Polo sneakers. We choose brands for identification.

Risk. Often times the risk of a poor purchasing decision outweighs the potential benefits. We choose the big brand because we think it is a safer choice. When you see the McDonald’s sign when pulling off the highway looking for a meal, you know what to expect. You might skip a restaurant called Big Jim’s Burger Joint because you have no idea what it will be like. What if the food is bad or you get sick? Even though Big Jim probably makes a better burger than McDonald’s, the risk outweighs the potential benefits.

The problem with choosing big brands is that we miss out on the opportunity to explore something that is unknown. We miss out on an experience that is either simply amazing or so bad that you will be telling stories to your friends for years. Choosing big brands is often the safe choice but it’s also the most boring and unremarkable one. And who wants to live a boring and unremarkable life?

If you want to break free of the comfort of big brands but are afraid, here three things you can do to help make the shift:

Listen to what others saying. With Yelp, Trip Advisor, Amazon, and most websites, you can explore what others are saying about unknown or lesser known brands you are considering. Listening to others can help reduce the anxiety of your decision. There is comfort in knowing others have gone before you.

Use time as an advantage. The higher the price of a buying decision, the more risk is associated with it. However, these decisions typically take longer, allowing more time to research the best solution. Take the time to do your homework. Look for all the alternatives both known and lesser known. Evaluate them all. Your best solution may not be the big brand. If a decision is for a lower priced service or product, take a chance on the lesser known brand since the risk is low. You may be amazed at your experience.

Look beyond price. Often times, lesser known brands offer more features and benefits than the big brands. I was once asked by a potential customer why he should buy from my company versus one of my largest competitors. My answer was simple, we ship in 24 hours. The big brands all had lead times of 6-8 weeks. The customer switched because speed was important to him.

The small business advantage. Many times, the lesser known brand is a small business working hard to earn your money. Instead of spending time in corporate meetings, small business leaders spend time with customers learning what they like and dislike. They are constantly adjusting their business model to please customers and attract more business. To them, it is personal. Show them some love and give them your business. You may become a lifelong customer.

Breaking away from big brands means departing your comfort zone and choosing an unpredictable outcome. Most likely the experience will be positive especially if you have the time to research the best solution. Regardless, it gives you the chance to explore something that is unknown. So, step away from the boring and predictable and enjoy the experience!

“Two roads diverged in a wood, and I took the one less traveled by, And that has made all the difference.” Robert Frost